Sprint Continues to Rack Up 800 MHz Rebanding Costs, Transition Administrator Says
The time still has not come to require Sprint Nextel to settle up with the government on unpaid 800 MHz rebanding costs, the 800 MHz Transition Administrator (TA) said in a recommendation to the FCC. The rebanding isn’t complete and Sprint continues to rack up costs, the TA said. When the commission approved its landmark 800 MHz rebanding order in 2004, it required Nextel, then an independent company, to pay the full value of the 10 MHz national spectrum license it got as part of the rebanding agreement. Other carriers insisted on the provision, arguing that as a matter of fairness Nextel should have to pay a kind of windfall charge.
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The FCC set the value of the license at $4.8 billion and the value of spectrum that Nextel would contribute at $2 billion. That left $2.8 billion in costs for Nextel to cover. But the 800 MHz rebanding has taken longer than expected. Originally it was to be finished by June 2008, and the true-up payment was due six months later. The FCC granted Sprint a six-month extension in a December 2008 order, and a series of additional postponements since, on the TA’s advice.
"In its June 29, 2009 True-Up Deferral Order, the Commission stated that based on the progress to date … it would be premature for the TA to conduct the required financial ’true-up’ because it would fail to take into account a large portion of Sprint Nextel’s eventual cost obligation,” the TA said in a report posted Tuesday on the FCC’s website. “The TA believes that the same remains true at this time.”
A “substantial number” of 800 MHz licensees “have yet to complete rebanding,” and a Dec. 31 true-up “would fail to take into account a large portion of Sprint Nextel’s eventual cost obligation,” the TA said. Sprint had paid about $1.23 billion in total incumbent licensee reconfiguration costs by June 30, “including replacement equipment” and racked up “approximately $294.5 million for its internal costs,” the TA said.
Sprint has completed the transition of the last Broadband Auxiliary Service market and reported to the TA that by June 30 it had incurred about $730 million in costs from the 1.9 GHz band’s reconfiguration, the TA said. But of that amount, Sprint is getting about $200 million back from Mobile Satellite Service licensees and Advanced Wireless Services operators for their proportional shares of the costs, the report said.
A Sprint spokesman said the carrier had paid out about $2.7 billion by the end of Q3, based on a recent financial filing. That is just $100 million short of the amount Sprint Nextel was expected to owe under the 800 MHz rebanding order.